$90 million in CIDA funds went to firm that filed for bankruptcy protection

The Canadian International Development Agency (CIDA) has provided more than $90 million over a span of nearly two years to an international development firm that filed for bankruptcy protection in 2011.

In response to an order paper question from Liberal MP Massimo Pacetti, Minister of International Cooperation Julian Fantino said CIDA has funded Canadian firm CRC Sogema with more than $90 million since May 25, 2011, when the organization filed for bankruptcy protection. According to the response, CRC Sogema is the only entity which has received funding from CIDA while being under legal protection from creditors since 2006.

“If I just look at the money that’s been given to somebody under credit protection that has not fulfilled all its obligations, I’m a little bit suspect,” said Pacetti.

Since 2006, CIDA has funded twelve CRC Sogema projects in countries including Morocco, Burkina Faso, Mali, the Democratic Republic of Congo, Haiti and Guyana. For example, CIDA provided more than $40 million to the organization for its projects in Haiti alone, and more than $25 million to its projects in Morocco. The CIDA funding for CRC Sogema focuses on projects that supports things like education, teacher training and health.

According to its website, CRC Sogema, founded in 1984, is a leader in the field of management of international development projects.

Fantino’s office said Monday CIDA took action to mitigate risks to the Crown when CRC Sogema was under legal protection from creditors. The department reviewed things like the status of project implementation, management arrangements and contractual terms and conditions, conducted an internal review of risk factors and established a risk management approach with the organization. CIDA continues to monitor the situation closely, said Fantino’s office.

“The amounts payable under existing contracts, in line with demonstrated milestones achieved, will be paid on time,” said a CIDA spokesperson in an email. “As per all Government funding projects, the agency is only reimbursed upon the issuing of receipts for work completed.”

Fantino said CIDA continued to fund the organization after it filed for bankruptcy protection because it has fulfilled its obligations.

“This partner continues to meet its contractual obligations and is delivering concrete results for those in need,” said Fantino.

Pacetti says otherwise. He said he has been pushing the Conservatives for answers since 2011, when he first learned about CRC Sogema’s financial woes. Since then, he said he has been contacted by two individuals who completed sub-contracted work for CRC Sogema in Haiti and the organization now owes money to. While he would not name the individuals, he said one of them is taking legal action against the company and the other gave up.

“They owe money on certain projects and they owe money to certain people, and they haven’t paid them. Nor do they intend to pay them. So I’m not so sure where they (Fantino’s office) get their information from,” said Pacetti.

According to court documents, CRC Sogema’s total liabilities amount to more than $8 million. One of its creditors is HSBC, which carries an amount declared of nearly $2.7 million.

The government of Canada has funded more than 70 CRC Sogema projects since 1989, according a CIDA spokesperson.

A March 12 press release from CIDA said the organization will soon begin working with the State Bank of Vietnam’s Banking Supervisory Agency to help Vietnam modernize and strengthen its banking system and financial relations.

NDP International Development Critic Hélène Laverdière said CRC Sogema’s most recent project in Vietnam is ironic, given its demonstrated inability to deal with its own financial problems.

“It’s a bit surprising to see an organization which has filed bankruptcy protection being hired to provide some sort of financial sector advice,” she said.

Pacetti said he realizes there is a difference between bankruptcy protection and full-out bankruptcy, which CRC Sogema has not filed for, but that should not matter.

“It’s fine that they’re not in bankruptcy, just credit protection, but it doesn’t make sense. It just means you screwed people a little bit less than you should have,” he said.

For Pacetti, CIDA’s continued partnership with CRC Sogema is evidence of a more general oversight problem within the department.

“What’s the oversight on all of this? They’re just distributing the money and then they wash their hands because it’s going to a third party, which doesn’t make any sense to me,” he said.